Online gambling case pits Antigua against U.S. and challenges WTO

james01

Dormant account
Joined
May 13, 2007
Location
Germany
Very interesting article from the International Herald Tribune:

But not complying with the decision presents big problems of its own for Washington. That is because Mendel, who is claiming $3.4 billion in damages on behalf of Antigua, has asked the trade organization to grant a rare form of compensation if the U.S. government refuses to accept the ruling: permission for Antiguans to legally violate intellectual property laws by allowing them to distribute copies of U.S. music, movie and software products, among others.

Here is the full article:
You do not have permission to view link Log in or register now.
 
Update

ANTIGUA WTO CLAIM TO ESCALATE?

USA could be faced with a $7 billion bill if WTO takes action

The Caribbean island nation of Antigua and Barbuda, which came out top in a David and Goliath World Trade Organisation tussle with the United States over online gambling (see previous InfoPowa reports) could be about to raise the stakes in its claim for compensation.

In a report in the Antigua Sun newspaper this week a figure of up to $7 billion is mentioned, as the nation's legal representative Mark Mendel warns the U.S. to expect billions more in sanctions as the country prepares to file its claim.

In June, Antigua and Barbuda initiated an effort to impose trade sanctions valued at US$3.4 billion annually on the United States, filing a claim for concessions primarily through the suspension of Antiguas copyrights, trademarks, industrial designs and patents obligations to the U.S.

The US$3.4 billion is just what were entitled to by virtue of them not having complied with the decision, Mendel said, explaining that Antigua has not yet filed a claim to address the GATS withdrawal issue. We havent even told them what that claim will be yet. The only thing I told them is itll be at least as big as our other claim."

The newspaper reports that in addition, the European Union has filed a $15 billion claim against the U.S. for its withdrawal from its GATS commitments. Earlier this year there were also indications from Japan, Brazil and China that claims may be laid.

Mendel told the Antigua Sun that he met with representatives from the office of the U.S. Trade Representative (USTR), at their request, at the beginning of August. He said that the meeting, however, made no progress.

Weve asked them to give us some proposals as to how they could solve things with us and they have yet to really give us any firm proposals, so it was a very inconclusive meeting," Mendel revealed. " I think the reason that they alled the meeting was just so that they could say that they did so.

That meeting was with the branch of the USTR dealing with the GATS commitment. A separate group from the USTR is handling the dispute resolution aspect of the conflict between the two countries. Mendel says that he is still looking to that group to address how the case can be settled.

This Friday (end August), Antigua and Barbudas representatives go back to the WTO to present a justification of the $3.4 billion sanction it officially sought to claim last month.

Mendel has maintained from the start that the $3.4 billion in sanctions are justifiable. As he explained it, the sanctions were calculated by an internationally recognised firm of economists and were based on calculations that took into account the size and value of the global internet gaming market as well as Antigua and Barbudas market share.

He assured the Antigua Sun that the amount in sanctions was completely defensible.

Its a massive number but, after talking to the economists and going through everything, it is a very realistic number, he said. He acknowledged that the figure is several times Antigua and Barbudas GDP, but pointed to the massive wealth created for Antigua and Barbuda and its online gambling companies by the industry, wealth which Mendel said has been almost destroyed by the actions of the U.S.

I think were still in the drivers seat and I feel optimistic about it. Its tough and were the smallest guys in the world taking on the biggest but I think were doing well, he said.
 
It will certainly be interesting to see how this plays out. My initial gutt says that the Bush Administration will ignore this as usual, and play the hand that the WTO needs the US more than the US needs it. But, the following recent events may make this interesting nonetheless:

o EU jumping on the bandwagon. Antigua and Barbuda by itself, may have
not put enough scare into this thing;

o Tony Blair stepping down. Will his successor be as patronizing to Bush ?
Doubtful....

o Alberto Gonzalez resigning. The DOJ is now scrambling, and surely the
implementation enforcement of UIGEA cannot be on their immediate
agenda radar;

o US clamoring to the WTO about China's improper practices. Is this not
calling the WTO kettle black ?

o IMEGA timing is impeccable. Could they win getting an injunction on
UIGEA ?

Like I said, it will be interesting how this plays out over the next month or so.
 
Update

WTO LATEST (Update)

US considering international claims arising from its intention to withdraw online gambling treaty obligations

The World Trade Organisation argument over online gambling between the United States and Antigua and Barbuda....and by extension now the European Union, Australia, Brazil, Canada, Costa Rica, India, Macao and Japan...continues to develop, according to an article in the Antigua Sun this week.

The article reports that the US is unlikely to back down from its position on online gambling, despite facing billions of dollars in claims. Instead, it is maintaining that withdrawal from World Trade Organisation (WTO) trade obligations to grant market access to Internet gambling companies is the best way to resolve the ongoing dispute with Antigua and Barbuda.

The Antigua Sun interviewed an official in the office of the US Trade Representative, who curiously insisted on remaining anonymous, but said: We are trying to clarify, by using Article 21 of the GATS agreement (General Agreement on Trade in Services) that our obligations should not extend to gambling."

For the USA, the downside of this strategy (see previous InfoPowa reports) is that the US must reach settlements with all WTO member states which file compensation claims as a consequence of the unprecedented withdrawal of obligations. Thus far, it is understood that the USTR is considering compensatory claims from the European Union, Australia, Brazil, Canada, Costa Rica, India, Macao and Japan. The official denied sight of a $15.5 billion claim allegedly submitted by the EU, and said that publicly discussing amounts under discussion would not help a negotiating process.

We are actively working to negotiate, under Article 21, with all of the WTO members which made claims, and there are eight of them," he said. "We believe we can reach an expeditious solution using this procedure.

Weve been quite pleased, to date, that the members who have made claims seem to be approaching this issue with a sense of seriousness and realism and that they generally seem determined to reach a solution, the trade official told the Caribbean newspaper.

The US trade official emphasised that the WTO requires the parties to keep the details of their talks confidential in order to promote negotiated settlements, but said that the claimant nations are not submitting total values to their claims at this point.

He added that all eight countries have argued that they have, in one way or another, an interest in gambling in the US. Those interests can take various forms and, in fact, they vary quite drastically across these eight members, so their claims obviously reflect the differences in the nature of the way they believe they would be affected by our proposal to clarify that gambling is not included in our obligations, he said.

The deadline for the conclusion of the Article 21 process is 22 September but extensions are understood to be possible. The US withdrawal of of its GATS commitment is being treated as a separate, though connected issue, to the trade claim being pursued by Antigua and Barbuda at the WTO.

Last Friday, Antigua and Barbuda presented a written submission to justify its US$3.4 billion per year claim against the US (see previous InfoPowa report). As Antigua and Barbudas attorney at the WTO Mark Mendel explained it, the methodology paper was a description of how Antigua and Barbuda came up with its damages. The US response to the submission, he said, is due on 19 September and then Antigua and Barbuda will get a chance to respond to the US position on 4 October.

The decision is made by the same panel that we were before last time, which was very sympathetic to us and it will rule on this issue before the end of November, Mendel said.

The USTR official declined to comment on Antigua and Barbudas submission, pointing out that there has been insufficient time to study it carefully, but the US continues to hold the position that the damages being claimed appear disproportionate. Our view is that the figure seems excessive, but were going to have to study the economic methodology thats been put forward and were going to have to have our own economists look at it and we will have a response to it, he said.
 
the US is unlikely to back down from its position on online gambling, despite facing billions of dollars in claims

That doesn't sound very promising to us neglected US citizens. :oops:

I'd like to know how the WTO complainants can come up with a finite figure to settle? Surely if the US continued to "allow" its citizens to play online indefinitely, the total revenue which is now considered lost wouldn't be a fixed amount? I'm curious about how each figure was calculated.
 
Maybe the claims are calculated to a certain date only. Hopefully, there will be changes after the elections. The only way forward must be regulation of online gaming and for once they should look at what the UK is doing IMO.
 
Here is another update from yesterday:

US refusing to budge in online gaming dispute with Antigua


The United States continues to resist compliance with a World Trade Organization ruling regarding the double standards inherent in US online gambling regulations.

The Antigua Sun printed excerpts of an interview with an official from the United States Trade Representative (USTR) office which outlined the basic US strategy for resisting the ruling. We are trying to clarify, by using Article 21 of the GATS agreement (General Agreement on Trade in Services) that our obligations should not extend to gambling, the unnamed official said.

In addition to reaching settlement with Antigua, the US will also have to negotiate settlements with European Union, Australia, Canada, Costa Rica, India, Macao and Japan. Antigua proposed a controversial compensation model a few weeks ago, whereby the country would be allowed to violate US intellectual property laws with a gross cap of $3.4 billion per year. The US has until September 19th to present its response to that claim, and then Antigua will have until October 4th to present their rebuttal.

The US official claimed that negotiations with all members were going smoothly. Weve been quite pleased, to date, that the members who have made claims seem to be approaching this issue with a sense of seriousness and realism and that they generally seem determined to reach a solution; and we continue to believe that this Article 21 process is really the path that is most likely to lead to a resolution of this issue, the trade official told the SUN. Antiguas lawyers disagreed strongly with this assessment, arguing that the US seemed to have called the meeting simply to give the appearance of cooperation.

The final decision on the issue will be issued by the end of November. Mark Mendel, attorney for Antigua, likes his sides chances when the matter comes to hearing. The decision is made by the same panel that we were before last time, which was very sympathetic to us, Mendel told the Sun.
 
Small Nations Wield Large Sticks

SMALL NATIONS CAN WIELD BIG STICKS

Silicon Valley and Hollywood lobbying US government over possible WTO consequences

The World Trade Organisation dispute which the tiny island nation of Antigua has won against the unbalanced posture of the United States on Internet gambling has generated mainstream world press coverage for the pastime like never before, and continues to do so.

This week, a Newsweek report on the David vs. Goliath nature of a struggle that has the United States on the back foot was picked up by several leading mainstream publications, again drawing attention to the consequences for the American government of taking the unprecedented step of withdrawing its WTO treaty obligations agreed in the Uruguay Round.

Titled "The Caribbean Hold 'Em," the Newsweek piece recaps the events leading to today's situation (see previous InfoPowa reports) and opines that the issue has proved that small nations can wield large digital sticks.

The final WTO ruling, which the organisation is expected to begin enforcing next (October) month, could oblige America to overhaul its prohibitive stance on online casinos, not just in relation to Antigua but to a host of othersincluding the EU, Japan and Australia, reports Newsweek.

That would double the size of the $15 billion-a-year online gaming industry almost overnight, it quotes the Safe and Secure Internet Gambling Initiative, a pro-gaming pressure group. And since the WTO might allow nations that have been hurt by U.S. gaming laws to flout American intellectual-property law in response, the dispute is already spreading to Hollywood, Silicon Valley and beyond.

The article quotes now internationally known Antigua legal representative Mark Mendel: "I was laughed at when I first brought the case. They totally underestimated me."

More important, the United States underestimated the remarkable power that even tiny countries wield in today's digitised global economy. Usually, when trade laws are broken, the WTO allows export sanctions to be imposed on the violating nation. But since Antigua hardly has the muscle to bring any meaningful sanctions against the United States, trade experts expect that the WTO will likely take another approach and allow Antigua to flout intellectual-property law.

If America doesn't fold on gaming, opines Newsweek, next year Antiguans could well be selling billions of dollars of legally pirated copies of everything from Microsoft software to Disney movies without paying the copyright owners a penny.

"Intellectual property is the perfect sanction item," says Nao Matsukata, a former senior trade official for the United States. "It gives small countries like Antigua absolute leverage." The WTO has allowed the use of IP as a stick once before, in the famous EU-Ecuador banana squabble (the threat of it was enough to make the EU cut a deal). But experts expect it will become common policy in the future, and see online gaming as a test case for its effectiveness.

It's no surprise that lobbyists from Silicon Valley and Hollywood are now storming Capitol Hill, pushing for a deal. Last month the Motion Picture Association of America urged the U.S. trade representative to negotiate with Antigua in order to prevent bootlegging.

But the Bush administration is staunchly refusing to bend on virtual gaming. The (surprisingly weak) legal line is that America never intended to include gambling under its WTO obligations, which were signed in the mid-1990s.

No dice, says the WTO. "The United States has a legal commitment; they can't just say 'oops' and be done with it. What kind of precedent would that set?" asks one WTO insider, who spoke to Newsweek on condition of anonymity because he did not want to be quoted discussing an ongoing case.

Ultimately, this leaves the United States with a very weak hand to play. It could continue to deny that the WTO has legislation over its internal gambling laws. But that would undermine the overall credibility of the organization by showing it to be unable to enforce its rulingsand America needs a strong WTO to mediate prickly conflicts with, say, China, over things like Internet censorship and the mass manufacturing of fake designer goods.

Eight other WTO members, including the European Union, Australia and Japan, are now lining up to claim compensation from the United States over online gaming.

"The EU is almost licking its chops," Antigua's lawyer Mendel told Newsweek. "In total, this could come to $100 billion in sanctions. "

He added that giant American bricks-and-mortar casinos like Harrah's and MGM are making plans to move into the online sector as soon as the U.S. trade stance becomes clear.

They could get a sign as early as this week. September 22 is the first WTO deadline for America to cut a deal with Antigua and the other nations. But one WTO insider predicts that the only announcement on that day will be that the deadline has been extended.

"This won't happen fast; America is going to dig its heels in," says Sallie James, trade-policy analyst at Washington's Cato Institute.

"But if I had to bet, I would say that by this time next year America will have changed its laws." And in this case, that means all bets will be on.
 
Antigua ALREADY violates US copyright - the government when I was there (and probably still now) stole US TV signals via satellite and distributed them and sold them as 'cable TV'.
 
As far as I can see that MSNBC article is just more evidence that the US DOJ does not enforce the laws, the DOJ does not care about the laws, the DOJ cares about it's power to do what the man in control wants, no matter what the laws or the Constitution says...
 
All of which serves to show that all these damnable online gambling laws are poorly written, vague, clarify nothing, amend nothing, which, in the end, lets the Feds prosecute whoever they damn well please because none of these stupid laws have been challenged in court recently.

And I think it's pretty stupid that American laws hold horse racing (betting) as 'sacred' and try to protect and bolster it. It's the same in our state with dog racing. The horse track died long ago (govt. wouldn't allow slots at the track), but a couple of dog tracks are hanging on by the skin of their teeth ONLY due to the fact that they've brought in those bingo or VLT slots. For some reason (which I cannot fathom) dog tracks are 'important' and need to be 'rescued'. But gambling is 'illegal' in Alabama. :rolleyes:

If nothing else, I hope the problems with Antigua and the WTO force our lawmakers to clarify and update the antiquated laws the USAO is applying to online gambling.
 
First US WTO compensation offer rejected

The horsetrading over the compensation that the US should pay for withdrawing from it's WTO obligations has begun....and the first offers from the Americans are being rejected, according to this report:

You do not have permission to view link Log in or register now.
 
WTO TROUBLES COULD BRING THE UNITED STATES TO ITS SENSES


Hammering small island nations is one thing....taking on major trading partners like the EU is another

With World Trade Organisation members likely to be submitting compensation claims in the billions to the United States over its stance on Internet gambling, the international mainstream media is now taking serious notice of a dispute which hitherto appeared to involve only the tiny island nation of Antigua and Barbuda.

The plucky Caribbean nation has been fighting a lone battle against its massive neighbour for over three years now, conclusively beating the United States at every stage in its claims that the discriminatory nature of US online gambling law was in contravention of its World Trade Organisation treaty obligations (see previous InfoPowa reports)

But the latest American strategy - to take the unprecedented step of withdrawing its online gambling obligations, is what set the US on a collision course with at least seven other WTO member countires, including the European Union bloc which encompasses most of Europe's leading nations.

EU officials have already indicated that the initial and tentative US compensatory offers are a long way off fair and reasonable compensation for the billions in corporate losses which the US policy on online gambling has caused around the world.

Most leading news magazines and papers are now covering the debacle in depth, analysing possible solutions which could be deployed to let the United States off the hook. Increasingly, the adoption of legislation such as Congressman Frank's Internet Regulation and Enforcement Act (IGREA) is seen as a way out for an increasingly beleaguered America.

IGREA seeks to regulate and license online gambling in the United States and would not only solve the discriminatory problem caused by the USA's ambivalent policies allowing horserace, lotteries and fantasy sports online betting, but could make redundant the Unlawful Internet Gambling Enforcement Act which bans financial transactions with online gambling companies.

The UK newspaper The Guardian commented on the possibility in an article this week, opining that the ban could be overturned as negotiations between Washington and Brussels on compensation have apparently stalled.

The newspaper commented that lawyers for the EU are seeking compensation for the severe losses suffered by the British and European companies banned from operating in their biggest market last year, after the Bush administration signed off on UIGEA.

However the gambling companies, which saw billions wiped off their share prices after the ban, would not receive any cash if US proposals for better trade concessions on warehousing were accepted, and instead Brussels wants Washington to open up other areas of its services industry to European firms, such as insurance or reinsurance.

But such a deal could cost the US billions of dollars and it might therefore opt to allow overseas gambling operators back into its market under licence.

The Guardian was told by an EU trade official: "The UK operators and others who have lost out would get nothing. But the Frank bill would go a long way to meeting our demands."

Experts at a Brussels press conference this week, including Naotaka Matsukata, former director of policy planning for the US trade Representative and Craig Pouncey, Brussels-based trade lawyer with Herbert Smith, said that the US and Europe were heading for a major clash over the dispute.

The US$3.4 billion claim by Antigua and the much larger claim of over US$100 billion by the seven other economies seeking compensation are some of the largest penalties in the history of the WTO, said Matsukata. This is by far the most significant WTO case ever and its implications for both the US and the EU are enormous. Given the size of the US gaming market, both the potential benefit for European industry and the corresponding potential damage to US companies is unprecedented.

The EU, Macau, India and Australia are among the countries seeking compensation over the US actions.

European and US lawyers warned this week that the dispute posed a "systemic risk" to the credibility of the World Trade Organisation after it ruled earlier this year that America acted in an illegal and discriminatory manner by excluding online gaming operators from the tiny Caribbean island of Antigua.

At the same time, the White House allowed domestic operators to offer gambling over the internet and withdrew its entire $100 billion gambling industry from its free trade commitments.

The EU online gaming industry, mainly based in the UK, employs 15 000 but faces a growing challenge from US operators such as Yahoo!, Google and Sands.

Jonathan Cohen, a New York-based public affairs consultant acting for EU operators, said the US legal regime was "wildly inconsistent" as it allowed online fantasy sports leagues, lotteries and racecourse betting but specifically banned other services provided by European firms.

Clive Hawkswood, chief executive of the Remote Gambling Association, said the European industry suffered from outrightly protectionist measures from the US. "It is using unjustified trade barriers to stop EU operators and a proper licensing system would attract many EU operators," he said.
 
You do not have permission to view link Log in or register now.

Thu Sep 27, 2007 2:07pm EDT
By Doug Palmer

WASHINGTON (Reuters) - The United States brushed off suggestions on Thursday that it may have to provide $100 billion in compensation to the European Union and other trading partners because of its restrictions on Internet gambling.

A U.S. trade official, speaking on the condition she not be identified, said she could not reveal how much compensation -- in the form of increased foreign company access to the U.S. market -- trading partners were demanding in the talks.

"We can say that some of the numbers being put forward are based on faulty and exaggerated assumptions," she said.

Lawyers for European online gaming firms -- among the biggest in the world -- said on Wednesday the EU should press for as much as $100 billion in compensation, given the plunge in market value of publicly-traded firms after Congress tightened Internet gambling restrictions last year.

"This is by far the most significant WTO case ever and its implications for both the U.S. and the EU are enormous," Naotaka Matsukata...

*********
(Personally, I think the US has its head up its a$$ and doesn't realize, or just doesn't give a damn about, the great damage they've done to legitimate, publicly traded, businesses. What about all the jobs lost? All the future business cut off like a faucet when those casinos blocked US players? Makes me :puke: )
 
You do not have permission to view link Log in or register now.


The Times Online said:
Europe and the United States are on the brink of a major trade dispute worth billions of pounds over Washington’s decision to renege on international trade commitments and protect its domestic gambling industry by preventing foreign companies from entering the lucrative market.

I think a lot of us saw this coming.

The US Trade Delegation can ignore or blow off the Press, but they are going to have a hard time blowing off the other Trade Delegations.

From what I have been reading the EU and the other Countries that have filed claims are convinced they are in the right and that one way or the other the US should hafta pay up to them.

This all comes down to playing fair... and as far as the online gambling issue goes the US so far has been playing dirty, very dirty, with everyone involved...

And it's looking like the US may hafta pay up.
 
This all comes down to playing fair... and as far as the online gambling issue goes the US so far has been playing dirty, very dirty, with everyone involved...

And it's looking like the US may hafta pay up.
And unfortunately that's probably the route they're going to take - just buy their way out of their obligations instead of doing the right thing.

For some reason I have been under the impression that this November was election month and that our new democratic president would begin next year. Imagine how thrilled I was to figure out I was wrong. I can't believe our 8-year sentence isn't up yet.
 
SlotsWizard said:
that's probably the route they're going to take - just buy their way out of their obligations instead of doing the right thing.

I hope not, but American politics has become so dirty, so corrupt that buying off the opposition has become the norm.

What bothers me the most about these WTO "Negotiations" is the US Trade Delegation that is in involved with these negotiations seems to constantly "give away the farm" as far as US Interests go and almost always side with whoever has the most money to spread around. (In this case the US land based Casinos)
 
I hope not, but American politics has become so dirty, so corrupt that buying off the opposition has become the norm.

What bothers me the most about these WTO "Negotiations" is the US Trade Delegation that is in involved with these negotiations seems to constantly "give away the farm" as far as US Interests go and almost always side with whoever has the most money to spread around. (In this case the US land based Casinos)

Things might be looking up...

You do not have permission to view link Log in or register now.


You do not have permission to view link Log in or register now.


You do not have permission to view link Log in or register now.


You do not have permission to view link Log in or register now.
 
WTO ONLINE GAMBLING DEBACLE TO BE DISCUSSED IN EUROPE

CENTRE FOR NEW EUROPE TO DEBATE WTO ISSUE

Brussels free trade think-tank to consider implications of US withdrawal of treaty obligations

The groundbreaking World Trade Organisation Internet gambling case that is threatening a major trade clash between the United States and the European Union will be the subject of a forum this week sponsored by the Centre for the New Europe, a leading Brussels-based public policy think tank with a special interest in free markets and open trade.

According to analysts, the US could be liable for up to $100 billion in trade concessions to European industries because of illegal trade restrictions placed by the US against European and other international gaming operators. The amount of the dispute is the largest in the history of the WTO.

Those speaking at the forum will be:

* Stephen Pollard, the President of the Centre for the New Europe;

* Nao Matsukata, former director of policy at the office of the United States Trade Representative under the Bush Administration;

* Lode Van Den Hende, trade specialist at Herbert Smith who represents European gaming interests;

* Dr. Sallie James, trade policy specialist at the Cato Institute, a major think tank in Washington, D.C.

The possible trade concessions are the result of Antigua's victory earlier this year at the WTO, which ruled that the US violated its treaty obligations by excluding online Antiguan gaming operators while allowing domestic operators to offer various forms of online gaming. Instead of complying with the ruling, the Bush Administration withdrew the gambling industry from its free trade treaty commitments.

As a result of the Bush Administration withdrawal - the first time a WTO member nation has withdrawn any of its WTO commitments - all 151 WTO members are allowed to seek compensation for the withdrawal equal to the size of the entire US land-based and online gaming market, estimated at nearly $100 billion. The EU, along with India and five other countries, has filed notice that it intends to seek compensation.

"This is by far the most significant WTO case ever and its implications for both the US and the EU are enormous," said Nao Matsukata, a former Bush Administration trade official. "This is also a watershed moment for the WTO because a major world power is thumbing its nose at the institution and disregarding its obligations," he added.

Already, several publicly listed online European gaming operators, such as PartyGaming and 888 Holdings, have lost billions of dollars in revenues and market value because of the US laws excluding overseas operators. Meanwhile, US giants such as Yahoo! and the Las Vegas-based Sands Corporation are beginning to market online gaming services in Europe.

The size of the dispute is astounding, experts say. The potential trade concessions are roughly twenty times larger than what had been the biggest previous WTO case, a $4.3 billion tax issue between Europe and the US that was resolved by the US adjusting its tax code. Most WTO claims involve far lower sums, such as Ecuador's $191 million claim against Europe over banana tariffs.

The EU has developed the world's leading Internet gaming businesses and is considered to have a strong lead over the US in this sector, with operations in the UK, Gibraltar, Malta, Austria, Bulgaria, Ireland, Estonia, and Sweden, employing an estimated 15 000 workers.

Unless the matter is settled, the size and nature of the trade concessions will be determined by WTO arbitration.

"One major question is how strong the EU will be in pushing the US for all of the concessions available to it," said Craig Pouncey, a Brussels-based trade lawyer with Herbert Smith.

The size of the entire US gambling market - which includes both online and traditional "bricks and mortar" casino operators - is in play because the US withdrawal applies to all of its gaming commitments globally. Some forms of online gambling (fantasy sports, state lotteries, horse betting) in the US are legally exempted from anti-online gambling legislation. 48 out of the 50 US states allow some form of gambling, while the industry employs more than 350 000 people and generates billions of dollars of tax revenues.

The online gaming dispute also has broader implications for Internet Commerce. It is the first WTO case supporting a small country's right and ability to create a globally important business sector on the Internet, as Antigua claims it was doing with online gaming.

The WTO will most likely deal with other Internet cases soon, as US search giant Google has suggested it will press a claim against China for violating the WTO by barring Chinese users from certain Internet sites using the Google search function.
 
Update

U.S. ONLINE GAMBLING STANCE CRITICISED IN TRADE FORUM (Update)

American foreign relations and trade credibility at stake

Expert panelists at a trade forum this week leveled harsh criticism at the US, focusing on a trade clash between the US and Europe over Internet gaming. The panel believes that the US could be liable for up to $US 100 billion in trade concessions to international industries as the issue heads toward a World Trade Organisation arbitration.

The disputed concessions arise from the Caribbean nation of Antigua's victory earlier this year when the WTO ruled that the US violated its treaty obligations by excluding online Antiguan gaming operators, while allowing domestic operators to offer various forms of online gaming (see previous InfoPowa reports).

Having failed in various stratagems to derail the Antiguan case or appeal against the findings, the US Trade Representative took the unprecedented step of withdrawing US obligations on gambling from its decade old free trade obligations. Consequently, interested fellow members in the 151 nation WTO community have the right to press for compensation for the withdrawal equal to the size of the entire US land-based and online gaming market, estimated at nearly US$100 billion.

The European Union, along with India and five other countries, has thus far filed notice that it intends to seek compensation.

"The US decision is a major threat to a rules-based international trading system," said Nao Matsukata, former director of policy planning for the Office of the US Trade Representative, speaking at the Brussels forum this week sponsored by the Centre for the New Europe, an important public policy think tank with a special interest in free markets and open trade.

"If more countries follow the US lead and do the same thing, the entire WTO system could implode and that would be extremely dangerous for US economic interests and for free trade generally.

"Part of what makes the US such a formidable opponent in international negotiations is its credibility. That credibility is now at stake for the US government not just in the trade area but in foreign relations generally."

Lode Van Den Hende, a trade lawyer at Herbert Smith in Brussels, criticised the US for prosecuting foreign online gaming companies while letting domestic online gaming interests operate with impunity.

"This is absolute discrimination against foreign operators that the WTO has found to be illegal," he said.

"It is exactly the kind of practice that the WTO was set up to eliminate, and now the US is violating this very basic principle that it fought hard to put in place at the inception of the organisation."

Others speaking at the forum included Stephen Pollard, the President of the Centre for the New Europe and Dr. Sallie James, trade policy specialist at the Cato Institute, a major think tank in Washington, D.C.

"This is by far the most significant WTO case ever and its implications for both the US and the EU are enormous," said Nao Matsukata, a former Bush Administration trade official. "This is also a watershed moment for the WTO because a major world power is thumbing its nose at the institution and disregarding its obligations," he added.

Already, several publicly listed online European gaming operators, such as PartyGaming and 888 Holdings, have lost billions of dollars in revenues and market value because of the US laws excluding overseas operators. Meanwhile, US giants such as Yahoo! and the Las Vegas-based Sands Corporation are beginning to market online gaming services in Europe.

The size of the dispute is astounding, experts say. The potential trade concessions are roughly twenty times larger than what had previously been the biggest WTO dispute, a $4.3 billion tax issue between Europe and the US that was resolved by the US adjusting its tax code. Most WTO claims involve far lower sums, such as Ecuador's $191 million claim against Europe over banana tariffs.

Thus far the US has questioned the value of the concessions demanded, whilst its own initial proposals have been dismissed. Negotiators have until the end of October when, unless the matter is settled, the size and nature of the trade concessions will be determined by WTO arbitration.

"One major question is how strong the EU will be in pushing the US for all of the concessions available to it," said Craig Pouncey, a Brussels-based trade lawyer with Herbert Smith.
 
It looks like the US Gorvernment has made exactly the same mistake as the online casino industry made before the passing of the UIGEA. The online casino industry did not take threats about passing of anti-gambling laws serious and never made any serious lobbing efforts. The industry underestimated the opponent they were up against. In the same way the US Government seems to have underestimated the potential scope on the trade dispute with Antigua and instead of battling Antigua they are now part of the largest trade WTO dispute ever. Hopefully it will get a beating as severe as the one the online casino industry received when the UIGEA was passed.:rolleyes:
 
Last edited:

Users who are viewing this thread

Meister Ratings

Back
Top